Long Island town cancels $2.2 billion resort with indoor skiing hill

View full sizeCourtesy of Riverhead Resorts, via APThis sketch shows a planned 35-story indoor ski mountain soaring over the pine barrens and farms on eastern Long Island. Developers with Riverhead Resorts envision a gleaming $2 billion complex of eight resorts in one on the site of a Cold War defense facility where the Navy once tested fighter jets for pilots.

GARDEN CITY, N.Y. — Town leaders on Friday canceled plans for a sprawling $2.2 billion resort with an indoor ski mountain on the site of a former defense plant, saying its Scottish developer had failed to keep up with payments for the property.

“Today, we bury the Riverhead Resorts transaction once and for all,” Riverhead Town Supervisor Sean Walter said in a statement. “I think most all of us found this ambitious dream a bit much to fathom.”

The town board voted 4-1 to cancel the deal to sell 750 acres of land at the site of a former Grumman defense plant in Calverton, a hamlet bordering the town, on eastern Long Island. The decision came after the developer failed to deliver on a promised $3.9 million payment last week, Walter said.

A deal signed in 2008 called for Riverhead Resorts to pay $163 million for the property, although the price was later renegotiated to $108 million in the wake of the Great Recession.

Resorts chief John Niven said Friday from Dundee, Scotland, that arrangements were being made to “imminently” wire the $3.9 million payment to the town, which has about 30,000 residents. He said he was hopeful town leaders would reconsider their decision to cancel the contract once the money was received.

“I am very, very disappointed to hear that the town has taken this action,” Niven said. “I am totally determined; I want to do that project. Honestly, for Riverhead to lose this opportunity is absolutely silly.”

Niven noted that he has already made $7.5 million in nonrefundable payments to the town and has spent $18 million overall on architectural plans and other preparations for the project.

The resort’s prime attraction was a 35-story indoor ski mountain. There also would be an indoor water park, a convention center and hotel, a winery, equestrian trails, campgrounds, an artificial lake and a spa surrounded by botanical gardens.

Conservationists opposed the project, predicting traffic jams, along with air and water pollution and said it would endanger wildlife. The property, about 75 miles east of New York City, was once used to test F-14 fighter jets and other aircraft. It also sits at the confluence of two popular tourist destinations — the south shore Hamptons and the north shore wine region, both of which draw big crowds in the summer.

Niven conceded it has been difficult, but not impossible, to find financing for the project in light of the economic troubles of the past several years, but he said “all the main financing is in place.” “I think we’ve done extremely well taking the project as far as we have,” Niven said. “It has never been our intention and we never will walk away.”

He said if he can persuade town officials to reconsider, an 18-month environmental review process was ready to proceed.

Walter, a first-term supervisor who conceded he never favored the project, which was agreed to by his predecessor, indicated there was no turning back. “Resorts has been in arrears under the terms of its contract for some time now,” he said. “Resorts has offered excuses and rationalizations, but what hasn’t happened is that the money hasn’t crossed the finish line.”

Michael Watt, a Long Island communications consultant who specializes in real estate-related issues, said it is probably best that all parties start over. “The town of Riverhead has dodged a bullet with the demise of the Riverhead Resorts project,” he said. “It needs to take a much more proactive, well-thought-out approach to this property.”